Intellectual Ventures Claims It's Misunderstood: It's Really Just Trying To Help Everyone Sift Through And Find Good Patents

from the that's-all-bullshit dept

Intellectual Ventures is at it again -- playing the "oh, little innocent us? we're not doing anything that should really concern anyone" card in the press. Wired is running an op-ed by Raymond Hegarty, IV's "VP Of Global Licensing in Europe." He's a long term patent maximalist... and it shows. The article is entitled: Intellectual Ventures: Why the Patent System Needs Aggregators Like Us, which should give you an idea of the fanciful rewriting of history you're about to read.

The U.S. patent system borrowed from mainland Europe a concept that had evolved over hundreds of years: the “moral right” for inventors to protect their ideas. But America's founders went even further – they also included the obligation for inventors to publish.

This extra part of the deal was ingenious: It has been key to America's history as a global leader in innovation.

Except, of course, that patents weren't actually based on "moral rights" at all. Hegarty is making that part up. It was an economic right designed solely for the purpose of "promoting the progress" of "the useful arts." And, yes, it had a disclosure component -- which would be brilliant if it worked. But it doesn't. Especially in the technology industry where IV holds most of its patents. Time and time again we've seen the same thing. No one in technology learns anything from looking over broadly written patents full of legal phrases that mean nothing to engineers. It's not uncommon to hear engineers say that they don't even understand what's in their own patents, once the lawyers get through reworking them. The whole idea that patents disclose things is a myth.

If Hegarty really wanted patents to disclose things, he'd support the idea that any software code covered by a patent had to have the original, working source code be submitted with the patent. Of course, that would make an awful lot of IV's patents not worth very much, since they could no longer be used to shake down companies which are actually innovating.

Because inventors were incentivized by protection, yet still obligated to publish, their ideas became available for everybody to see. Not only did this increase the global pool of knowledge, it also allowed follow-on developers to avoid the blind alleys experienced by the original inventor.

Again, this is part of the myth -- but it's bunk, as most engineers will tell you. It's much, much easier to learn from other products just by looking at those products or reverse engineering what they do, rather than reading over the patent. Hegarty is simply making up a world that does not exist.

The published patent also provides a roadmap to further innovation: the work-around. When developers become too enamored with popular features, they stop innovating. By preventing access to such successful features, patents conversely force competitors to come up with the new ideas or workarounds that lead to fresh innovation.

Another myth with no real support. The idea that developers become "too enamored with popular features" and only innovate because patents block them from staying enamored is laughable. It makes you feel like he's never spent any time with any living engineers or innovators. People innovate for a variety of reasons, and the idea that people don't try something new unless forced to by a patent limitation is simply ridiculous. Studies have shown that the driving causes of innovation are self-need first of all and to stay ahead of the competition second. Both of those give plenty of reasons for innovation without the artificial restriction of a patent.

Having started out his article by rewriting history and how and why people innovate, he then goes on to suggest that in such a purely mythical world, massive, obnoxious patent trolls like the one who pays his salary don't just have a place, but are somehow vital to the system.

But as technologies converge and the products we use become increasingly complex, the system needs intermediaries within the market – companies like Intellectual Ventures – to help sift through and navigate the published landscape. By developing focused expertise, these patent licensing entities and intermediaries can function as patent aggregators, assembling portfolios of relevant inventions and providing access through licensing.

Don't you see? Intellectual Ventures didn't just buy up 30,000 or so patents from a bunch of universities struggling to defend their overeager decisions to set up tech transfer offices just for the sake of shaking down actual innovators -- it did it to help companies "sift through and navigate" the patent "landscape." This is the point at which most normal, living, thinking people who are familiar with the patent system call this out for what it is: bullshit. 100% bullshit.

No company is going to Intellectual Ventures and paying them upwards of $100 million to have IV help them sift through the patents that are out there, to better understand the "disclosures" so they can further innovate. They're paying up to avoid getting sued and hit with a judgment that could be many hundreds of millions of dollars. In more colloquial language, this is generally known as a shakedown. But, thanks to our patent system, it's a "legal" form of a shakedown.

Yes, sometimes aggregators have to go to court to protect their patent rights – and get labeled with all kinds of nasty names for doing so.

Oh, Hegarty, be fair now: people were calling Intellectual Ventures a patent troll since long before it started suing companies. And no one is calling you nasty names for going to court. We're calling you nasty names for abusing the system massively to take money away from actual innovators to move it to those who have done nothing to move the market forward.

He then goes on to wax rhapsodic about the wonderful smartphone and how it's just so chock full of patent goodness. And, you see, what that really means is not that there are tons of companies abusing the system, but that the little guy -- the mythical sole inventor laboring away in his garage -- is somehow at risk of not getting his due, if it weren't for the kindly and benevolent likes of Intellectual Ventures... here to save the day.

Patent aggregators sift through the issued patents with an expert eye, and provide efficient access to the long tail of patents. When tens of thousands of patents touch a product, hundreds of inventors spread around the globe deserve to be paid. But in the race to market, product companies often ignore the long tail; small inventors have very little power to do anything about this unless they can enlist the help of patent aggregators.

In other words: please small-time patent holder, sell us your patent, so we can shakedown big companies for more money. The whole idea that anyone at Intellectual Ventures "sifts through" its patents with an "expert eye" for the sake of helping companies innovate is laughable. They look to bundle as many patents together as possible, so that they can go to companies and use the modern equivalent of the famous line from an IBM lawyer to Sun execs back in the day: "OK, maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

It's notable, by the way, that last year, when the reporters at This American Life did their episode all about patent trolls, mainly focusing on Intellectual Ventures, and they asked the company to give them any evidence of individual inventors helped along by IV, the company could only come up with one name, and when TAL tried to track that guy down, they discovered nothing to support the claims at all, but rather another troll case with a questionable patent being used to shake down actual innovators.

But aggregators, in order to maximize returns from the patents they've acquired, are incentivized to package and license patents as broadly as possible. If patents are available to all-comers, not just used to exclude, companies can focus on improving their products and competing through innovation.

You have to sit back and wonder if Hegarty actually believes this stuff or if he's really just getting a chance to exercise the more "creative" muscles in his writing skills. The company has done more to block competing through innovation than probably anyone else. It's done more to funnel money that could have gone towards actual innovation into the wallets of its own execs and investors. No one is running to IV because they think that it will help them "improve their products." In talking to lots of companies who have dealt with IV over the years I've never, not once, come across one who did a deal with the company eagerly or for the sake of helping them innovate. No, everyone does it for one reason only: to not get sued (or, possibly, to have access to patents to hit back against others who sue). IV isn't helping innovation, it's trying to monopolize the arms dealership business in the patent wars. And it's laughing all the way to the bank.

Despite this complexity, we must maintain the founding principle of the U.S. patent system – providing an incentive for inventors to create without fear of being ripped off. Only then can inventors continue to focus on doing what they do best: inventing. Society benefits when the value of ideas is recognized.

Society benefits when innovative products are brought to market and people who want them buy them in a free market. Society does not benefit when one company buys up a ton of useless, broad and vague patents that have nothing to do with the innovative products on the market, and then demands cash from companies if they don't want to get sued.

Aggregators also provide a signal to the market as the debate around patent quality continues. Every time Intellectual Ventures purchases a patent, we are making a bet that it is a quality patent. We purchase only 15 percent of the tens of thousands of patents we review, drawing on and continually building the expertise of our acquisitions team. Sometimes patents come as a package deal so we have to buy 10 to get the six or seven we really want, which is why only 40,000 of our 70,000 assets are in active licensing programs. But we continuously prune our portfolio to maximize quality – thus helping the market navigate the long tail of patents.

Translation: yes, some patents are so bad that even we can't figure out ways to misread what they were supposed to cover into pretending they cover something entirely different.

Ultimately, the users of those products – you – are the ones who benefit.

By paying a tax that increases the cost of the products you buy by a massive amount.

The whole thing is, once again, ridiculous. It's based on myths and an attempted rewriting of what's actually happening. It's sick and it's cynical to make such claims knowing full well that the only thing that Intellectual Ventures is doing for this market is sucking money out of actual research and development.

Reader Comments

I'd send Hegarty an e-flying pony but I think I'll throw fool's gold his way before to make sure he can navigate through the yellow patent road and make sure I'm not enslaving some green gnome inventor.

Re: And Things Are Only Going to Get Worse

Intellectual Ventures has purchased Kodaks patents. you can beat they are already digging through every file and ramping up the lawsuit engine, for all the 'inventions' they made.

FWIW, IV was part of a large group, including RPX (think IV, but with slightly less "evil") and a ton of big tech companies: Apple, Facebook, Google, Microsoft, Amazon, Samsung, Adobe, Fuji, Huawei, HTC.

So... at the very least, this is a case that won't lead to much more fighting over patents between those players (and, yes, isn't it interesting that many of those companies are involved in existing litigation against each other...)

Also, no, I have no idea how this sort of thing passes antitrust muster.

Re: Re: And Things Are Only Going to Get Worse

Mike, thanks for the response. IV was the major company listed in the linked (and submitted) article, along with RBX who I was unfamiliar with.

I do recall reading earlier this week or last week, that a consortium, including Apple and Google, were looking to buy the patents. Just thought they would have been mentioned in the article as well, as that seems to be an important details.

With the group you listed, it seems as if the dominant players in the market are starting to come to terms with each other. Setting things up so they don't go after each other, but create a huge wall to limit any new entrants to the phone market, as what phone would be successful without a camera.

"The published patent also provides a roadmap to further innovation: the work-around. When developers become too enamored with popular features, they stop innovating. By preventing access to such successful features, patents conversely force competitors to come up with the new ideas or workarounds that lead to fresh innovation. "

I missed the memo. When did reinventing the wheel become something we should aim for?

Except, of course, that patents weren't actually based on "moral rights" at all. Hegarty is making that part up. It was an economic right designed solely for the purpose of "promoting the progress" of "the useful arts."

Re:

I'll note too that I think it's really strange how you insist that authors and inventors should have no natural claim whatsoever to the fruits of their intellectual labor. I honestly don't get it.

I don't know anyone who thinks authors and inventors have no natural claim to their works. If you write or invent something and wish to be recognised for your effort, then that is your right. The problem is that those claims end where everyone else's rights to learn and express themselves begin. That those two rights inherently combine to create the ability to copy and expand on the works of others is a natural and desirable consequence of those rights, and one that is exercised constantly, in spite of silly laws that prohibit it.

Re:

First, the view of individual founders is irrelevant when talking about the actions of a legislative body as a whole. The motives of each delegate at the Constitutional convention in voting for the the constitution does nothing to change the specific language they voted for.

Second, the moral rights legal doctrine applies to the right to attribution and the right to protect the integrity of the work. Meaning an artist has moral rights in preventing the alteration or defacement of their creation. There is no economic component to moral rights in this sense.

If by moral rights he simply means natural law, well, then to say the founders adherents to natural law/social contract theory is basically restating common knowledge. If you are asserting that patents (and intellectual property) are an inevitable outgrowth of the labor theory of property, since Locke position was that property is created by the mixture of labor and nature (i.e., natural resources), this argument is interesting, but a bit of a stretch. Certainly not something to just throw out as an aside and take as a given

Mossoff, himself, is guilty of rewriting history in many ways concerning Locke, who fought *again* early predecessers of copyright, and clearly viewed it not as a natural right, but as an economic, utilitarian right.

Mossoff, himself, is guilty of rewriting history in many ways concerning Locke, who fought *again* early predecessers of copyright, and clearly viewed it not as a natural right, but as an economic, utilitarian right.

Do you actually have any evidence that Mossoff's views are the minority and that Oliar's are "*much* more compelling," or are you just playing the "my experts are awesome and yours suck!" game?

Shall we go into the nuances of your argument that IP only about utilitarianism? I think it's fundamental to your "let's abolish IP!" viewpoint, and I think it's totally bullshit.

Re: Re: Re: Re:

Well, since the abstract states his paper "exposes the near-universal misuse of history by lawyers and scholars today" its pretty much implicit in his argument that he's in the minority.

Your comments are just as high-level and non-nuanced as Mike's. Mossoff makes hundreds of points, and you're both trying to gloss over the whole thing as being "the minority view." That's lazy and unpersuasive.

I'm hoping that Mike will delve into the actual arguments rather than trying to brush the whole thing off. I've never seen Mike actually prove that IP is solely utilitarian. Nor do I think he can. The argument is fundamental to what Techdirt is all about, yet I don't think he can actually back it up.

Re: Re: Re: Re: Re:

[i]Your comments are just as high-level and non-nuanced as Mike's. Mossoff makes hundreds of points, and you're both trying to gloss over the whole thing as being "the minority view." That's lazy and unpersuasive.[/i]

(1) It's funny that you pretend that Mossoff's view is "not supported by historical facts," yet you can't cite even one single fact he puts forth that is not supported. Nor does Oliar even rebut what Mossoff is saying.

(2) Oliar's paper is about the meaning of the Progress Clause. He admits that there are currently four competing views for what that meaning should properly be, and he explicitly admits that his view is the minority view. Funny that you cite to it while pretending to brush aside Mossoff as being the minority view.

(3) Oliar actually admits that what I'm saying is true since he admits the historical fact that the Framers held many views.

I would love to discuss all of this, in depth, with lots of nuance. From what I can tell, you'd rather just keep repeating the mantra that IP is ONLY about utilitarianism. And you'll continue to disregard all evidence to the contrary to get there, no doubt. The fact is that IP has been thought of as a property right from the very beginning. It's not some economic regulation completely devoid of any Lockean influence. It never has been.

Re: Re: Re:

(1) It's funny that you pretend that Mossoff's view is "not supported by historical facts," yet you can't cite even one single fact he puts forth that is not supported. Nor does Oliar even rebut what Mossoff is saying.

If his view isn't supported by historical facts, then by definition all the 'facts' he puts forth are unsupported. Why should they be enumerated if the answer is 'all'?

The ONLY way for patents to make sense according to their purpose, is if the patent runs out BEFORE the time it would have taken an independent inventor to reverse engineer or otherwise come up with the same knowledge.

Patents are essentially the opposite of trade secrets. Patents' effective purpose is to get people to share the information that would otherwise be hidden by trade secret.

The driving factor for even having patents comes from the fear that there are certain discoveries that will significantly hold back the progress of science and the useful arts if they were not shared.

So Mike is against these grifters... but Megaupload is okay!

"the only thing that Intellectual Ventures is doing for this market is sucking money out of actual research and development" -- That's essentially what Megaupload and other pirates in the symbiotic chain do, Mike. Why do you promote Megaupload being able to get income from movies that it didn't make nor buy, its diverting income in whatever degree from those who DO make them?

INCONSISTENT. You can't just label Megaupload an "innovator" when its "business model" requires getting $100M movies for free.

Re: So Mike is against these grifters... but Megaupload is okay!

""the only thing that Intellectual Ventures is doing for this market is sucking money out of actual research and development" -- That's essentially what Megaupload and other pirates in the symbiotic chain do, Mike."

Let's apply some maximalist logic here.

Pirates do not suck money form R&D. They actually encourage R&D. Just look at all the neat forms of DRM you have. That could not have been possible without the pressure created by piracy.

Re: So Mike is against these grifters... but Megaupload is okay!

"That's essentially what Megaupload and other pirates in the symbiotic chain do, Mike."

Well, considering Megaupload DOES NOT take money from actual research and development, your point is largely irrelevant.

Secondly, if your point is they siphon money from the pockets of creators, that is largely untrue. Megaupload's profits directly come from people using them as a storage service. That some people misuse said services and store copyrighted material and distribute it to others is NOT Megaupload's business model. As such it can't be used as a slight against the company.

"Why do you promote Megaupload being able to get income from movies that it didn't make nor buy, its diverting income in whatever degree from those who DO make them?"

Except Mike DOES NOT promote that. He promotes that they offered a useful service (online storage) that people want and need and were willing to pay for. In addition, they were coming up with new business models to add to their repetoire which would monetize content for artists (even content that was "pirated"). THAT is innovation.

You can't just label Megaupload as "grifter" when its "business model" DOES NOT require getting $100M movies for free. Particularly since that is NOT it's business model, regardless of how devoutly you believe it.

By and large, you're an idiot with a grudge. Get fucking lost already.

"The U.S. patent system borrowed from mainland Europe a concept that had evolved over hundreds of years: the “moral right” for inventors to protect their ideas. But America's founders went even further – they also included the obligation for inventors to publish. "
Since the US didn't pay Europe to use the idea for the parent system, we didn't borrow it, we stole it.
Is IV going to start paying royalties to Europe now?

Re:

Further the early US encouraged the immigration of skilled artisans, and allowed them to patent the ideas that other had patented in other countries. It was a way of 'stealing' innovation from foreign countries, and protecting those that did the stealing.

The U.S. patent system borrowed from mainland Europe a concept that had evolved over hundreds of years: the “moral right” for inventors to protect their ideas. But America's founders went even further – they also included the obligation for inventors to publish.

This extra part of the deal was ingenious: It has been key to America's history as a global leader in innovation.

What a brilliant strategy: Establish the lie that patents are primarily a moral issue by taking the actual motives and presenting them as an "ingenious" afterthought.

Historically the patent monopoly makes sense in that the challenges to take a concept from ideation to execution were much, much greater than they are now. Today executing your ideas are much easier thanks in part to technology, and other resources that didn't exist previously. As such these monopoly priviledges aren't needed to entice people to create in today's enviroment for the "cost of entry" into the marketplace is so low. Where as in the past; when such "costs" may have been seen as nearly insurmountable, and thus society suffers having creators choose not to attempt to bring their products to market. This monoply priviledge was a carrot for them to make the effort instead of letting a good idea go to waste. Presently there are no excuses for a good idea to go to waste, (unless the originator is just lazy and still others will probably happen upon the same idea quickly anyway) thus the patent system is outdated for our times.

Re:

"Historically the patent monopoly makes sense in that the challenges to take a concept from ideation to execution were much, much greater than they are now"

You assume too much in that statement. Historically, most innovation and invention was because somebody needed something (there is even a saying about somebody's mother, or something). I would be taking a guess, but the guy that invented the wheel probably just wanted to move something heavy - and wasn't really thinking about getting paid for his invention. Lots of innovation and invention came well before there was an idea of patents.

Patent systems try to create monetary incentive where there is often already some other (usually better) incentive.